Wellness Program Return on Investment

A lot of employers, as part of their efforts to contain rising health care costs, are starting wellness programs variously described as wellness, lifestyle programs, health and productivity management, population health management and, simply, wellness programs.

The purpose of this article is to consider whether such health promotion programs improve health. When so, do they in turn reduce utilization of healthcare services and reduce healthcare expenditures?

The popular media have done much to promote the theory of corporate wellness. Last year, In Business –  Madison1 magazine printed a story accompanied by a table reporting an impressive range of Return On Investment (ROI) –

Return on Investment (Per dollar ROI for lifestyle programs)

o  Coors $6.15

o  Kennecott $5.78

o  Equitable Life $5.52

o  Citibank $4.56

o  General Mills $3.90

o  Travelers $3.40

o  Motorola $3.15

o  PepsiCo $3.00

o  Unum Life $1.81

Source –  2004 T.E. Brennan Business, as reported

Would these Return On Investments stand up to rigorous empirical analysis of the data? What factors produce such disparate returns among these wellness programs? and does the published literature, subject to colleague review of scientific methods, support the Return On Investments stated here?

Health and Productivity Management

Illness and injury associated with an unhealthful lifestyle or modifiable risk factors is reported to account for at least 25% of employee health care expenditures.

The most significant of these risk factors are stress, tobacco use, overweight or obesity, physical inactivity, excessive alcohol use, and poor nutritional habits.

Over the past two decades, a variety of groups at the local, state, and national levels have promoted the theory that health risk reduction and care management programs can improve worker health, and that worksite health education, health risk management, and benefit counseling should complement standard health insurance benefits.

The intensity of wellness programs range from bulletin board, brochure or newsletter information to on-site fitness facilities, health risk reduction classes, and personal lifestyle change coaching.

Wellness programs today often include a health risk assessment  to evaluate each staff member’s modifiable risk factors of illness. Program coordinators then target interventions to those that are at increased risk through personal communications and individual follow-up.

Robust health promotion programs might include classes on health risk reduction and job safety, fitness and exercise activities, health club memberships, and reductions in co-payments or premiums for personnel who adhere to advised medical screening guidelines.

Along with this, some businesss are restructuring health benefits and encouraging employees’ cost-sensitivity when accessing healthcare.5 These changes are intended to reduce employees’ need for and utilization of healthcare, yielding reduced group medical care costs.

Demonstrated reductions in healthcare expenditures should then provide businesss with a powerful bargaining chip in negotiating lower health insurance premiums during future terms.

Evidence basis –  A range of Return On Investment (ROI) estimates

The empirical research has produced results as varied as the well-liked media on ROI. Nevertheless, evidence continues to grow that well-designed and well-resourced wellness and disease prevention programs provide multi-faceted payback on investment.

Peer-reviewed evaluations and meta analyses show that Return On Investment (ROI) is achieved through improved employee health, decreased benefit expense, and enhanced productivity.

o  Goetzel and coworkers, in their meta-analysis of two dozen articles summarizing economic investigations of health and productivity management programs, found an typical return of $3.14 per $1 invested in traditional health promotion programs.  The Return On Investment (ROI) estimates for the individual health promotion programs ranged from $1.49 to $13.7,

o  Aldana reviewed 72 articles and concluded that health promotion programs achieve an average ROI of $3.48 when considering healthcare costs alone, $5.82 per $1 when examining absenteeism, and $4.30 when both outcomes are considered.

o  Ozminkowski and collagues conducted a 38 month case study of 23,000 participants in Citibank, N.A.’s health promotion program and stated that within a 2 year period, Citibank realized a Return On Investment between $4.56 and $4.73.10

Follow-up studies found improvements in the risk profiles of participants, with the high-risk group improving more than the “usual care” group1 then of more intensive wellness programming.

o  Chapman’s 2004 meta-evaluation of 42 studies, ranking overall validity of the studies, reports cost-benefit ratios from $2.05-$4.64.

In addition to immediately quantifiable cost reductions, scientists have announced a variety of spin-off benefits –  greater productivity, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15

Such wellness programs may also have positive effects on worker perceptions of the business and worker morale, even among nonparticipants.  These outcomes go beyond savings in direct health care costs to provide non-health related Return On Investment.

Tailoring health promotion program to maximize Return On Investment (ROI) Health promotion programs aim to reduce the health risks of staff members at high risk while maintaining the health status of those at low risk.

A variety of disease management interventions are available to fit the specific risk profiles of various workplaces. Insurers and businesses now seek to calibrate their interventions in order to achieve optimal risk reduction and costeffectiveness.

In 2001, University of Michigan researchers reported on stable trends in healthcare costs for over 2 million current and former employees in an 18 year data set.

The mean cost increase per risk factor gained ($350) was found to be more than double the mean cost decrease per eliminated risk factor ($150).

In other words, increases in costs when groups of staff moved from low risk to high risk were much greater than the decreases in costs when groups moved from high risk to low risk. Their conclusion –  Programs designed to keep healthful people healthful will likely provide the greatest return on investment.

On the contrary, Pelletier’s meta-analysis and other health promotion program evaluations18 suggest that individualized risks reduction for high-risk employees within the context of comprehensive health promotion programming is the crucial element in achieving positive clinical and cost outcomes in workplace interventions.

Dose-Response?

Several factors might affect the impact of various wellness programs and the ultimate ROI, including cultural and environmental factors, workforce demographics, level of participation and longevity of the wellness program.

Most cost-benefit studies have been conducted in big businesses with more than fifty personnel. But scientists have shown that similar results may be acquired by small businesses with as few as five personnel actively involved in a well-managed wellness program.

Various studies also suggest that even relatively modest levels of participation can achieve substantial wellness program impact. Contrary to reports by the well-liked media that such wellness programs require more than 70% participation, published reports of at least one case showed positive Return On Investment with 51% participation.

Length of intervention appears to be a more salient variable –  an impact on health costs ordinarily requires three-to five years of wellness programming.

Future developments

Despite the abundance of positive wellness program evaluations, several caveats remain. Negative results are less likely to be announced or published, hence biasing the Return On Investment upward.

Uncertainty persists regarding the specific impact of the various health promotion program components. But as these health promotion programs take hold, further research and evaluation will enable fine-tuning of health promotion program investments.

Meanwhile, the preponderance of data and the strength of the published research stand for a positive ROI for wellness programs.

In truth, the corporation case for such wellness programs is now well enough defined that some insurance brokers offer discounted rates to businesses that institute or subscribe to wellness programs.

Future questions will focus on how to best to combine robust and focused interventions, the intensity of elements, and how to calibrate the dose-response model to achieve a target Return On Investment (ROI).

Here, employers, personnel, and researchers will need to collaborate to define mutual goals for both clinical and cost outcomes.

Jessy

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